Image Venezuela announces issuance of cryptocurrency 'Petro' amid reality of hyperinflation [Image: Lima Charlie News]

Venezuela announces issuance of cryptocurrency ‘Petro’ amid reality of hyperinflation

by

Lima Charlie Business | South America, Venezuela

Something in Venezuela Square in Caracas was conspicuously absent this Christmas: lights. This year Venezuela has suffered from 2000% inflation, as the government ramped up the printing of money to deal with a constitutional crisis and an economic crisis brought on by a global drop in oil prices.

Image A group sings Christmas carols at a dark Venezuela Square in Caracas, Venezuela, Dec. 22, 2017 (AP Photo/Fernando Llano)
A group sings Christmas carols at a dark Venezuela Square in Caracas, Venezuela, Dec. 22, 2017 (AP Photo/Fernando Llano)
Venezuela Square in 2013. (news.cn image)

Image Venezuela inflation chart Bloomberg

Venezuelan president Nicolas Maduro announcing the country’s new 100,000 Bolivar note (worth less than $2.50). (Miraflores Palace/Reuters)

Lights were not the only Christmas tradition that was affected, gift giving also took a hit. For a Venezuelan family, even purchasing toys for Christmas could require sacrificing almost a year of pay

According to reporting by the New York Times, children are one of the principle groups hit by the economic crisis. Venezuelan government statistics show that mortality rates in children under four had jumped from .02% in 2012 to 2% in 2015.  

Image Bolivar notes hanging from a tree in Maracaibo, Venezuela November 11, 2017. [REUTERS/Isaac Urrutia]
Bolivar notes hanging from a tree in Maracaibo, Venezuela November 11, 2017. [REUTERS/Isaac Urrutia]
On December 3rd, President Maduro had announced on state channel VTV that the country would launch its own cryptocurrency, called the “Petro” allowing Venezuela “to move towards new forms of international financing for the economic and social development of the country.” According to Maduro, the digital currency (a petromoneda cryptocurrency) would help overcome US sanctions imposed by the Trump administration. The Petro is to be backed by Venezuela’s reserves of gold, oil, gas and diamonds.

This Thursday, Venezuela’s Minister for Communication and Information, Jorge Rodríguez, announced that within days the first issuance of the Petro would commence. According to Rodríguez, the issuance would be backed by 5.342 billion barrels of oil, worth the equivalent in dollars of more than 267 billion.

Rodríguez said that the Petro would comply with all standards designed for cryptocurrencies, such as those promulgated by the Blockchain Observatory, an entity attached to the Venezuelan Ministry for University Education, Science and Technology, established by the government to act as “an institutional, political and legal base” for the launch of the cryptocurrency.

https://twitter.com/VTVcanal8/status/946479988823478272

Image Venezuela Petro
[Telesur]
In spite of Venezuela’s dire economic situation, the political security of President Nicolas Maduro and his ruling United Socialist Party has improved in recent months.

In March, simmering tensions with the then opposition-controlled-legislature boiled over due to actions of the pro-Maduro Judicial branch. Since then Maduro has overturned Venezuela’s constitutional order, disempowering the legislature with a new Soviet-style “Constituent Assembly.” The “Unidad” coalition of opposition parties has staged months of violent and non-violent demonstrations. However, Maduro felt secure enough that his government released 44 activists from prison on Christmas, in a show of good-will prior to mediation talks to be held in the Dominican Republic in early January.

There is little to fear from these released activists, the Constituent Assembly has effectively neutered the opposition’s power in the legislative and local branches of government and the media. Maduro blocked the opposition’s path to the executive branch, banning them from participating in the 2018 presidential elections on December 11th.  The opposition, which was mobilizing tens of thousands of supporters on a daily basis mere months ago, has not met this decision in the streets. The opposition’s latest initiative is the establishment of free food distribution centers.

[Title Image: Lima Charlie News]

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